Former House Rep blames industry outsiders for associating crypto with bank’s failure
Barney Frank, a former member of the United States House of Representatives and board member of Signature Bank, has pointed fingers at certain members of the public in the wake of the bank’s collapse.
In a May 30 hearing before the New York State Senate, Frank said he had “no mea culpas” regarding the failure of Signature, claiming that the bank’s dealings with crypto were “safe and sound” prior to regulators stepping in. The former U.S. lawmaker suggested the bank acted as a facilitator for crypto rather than investing directly in digital assets and that some in the public failed to make this distinction.
“It wasn’t that people who were in the digital business themselves panicked; it was other people who didn’t understand the business but were frightened by it,” said Frank on the collapse of Signature. “Unfortunately, a lot of uninsured depositors were hostile to crypto and made the mistaken guilt by association of us and Silicon Valley.”
The New York Department of Financial Services (DFS) took control of Signature Bank in March despite many, including Frank, arguing the firm was not insolvent at the time. The bank’s collapse followed the failure of Silicon Valley Bank and the shutdown of Silvergate Bank, both connected to crypto firms.
Frank added:
“On the day we were shut down — I believe prematurely — our assets were fine, our capital was fine, our loan portfolio was fine. The only problem we had was crypto-fear-inaccurate withdrawals.”
At 12pm, the #NYSenate will hold a public hearing to answer questions about bank failures in New York State. Why did Signature Bank fail? What can be done to prevent future bank failures? Watch live.https://t.co/0sqElpSIYE pic.twitter.com/jSqtBF4HFP
— New York State Senate (@NYSenate) May 30, 2023
Related: ‘Ludicrous’ to think Signature Bank’s collapse was connected to crypto, says NYDFS head
The New York Senate hearing was one of the first at the state level exploring the failure of the crypto-friendly bank. Lawmakers at the federal level convened in March to discuss the events leading to the collapse of Silicon Valley Bank and Signature Bank. Digital assets could arise as a policy issue ahead of the 2024 primaries and elections across the United States.
Financial regulators in New York are often at the forefront of crypto industry-defining policies due to the available capital and businesses setting up shop in the state. Former FTX CEO Sam Bankman-Fried will face his criminal trial in New York starting in October, and DFS has been behind investigations and enforcement actions of several crypto firms since implementing its BitLicense regime in 2015.
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